The most important global indices started this week in the red territory. Stocks, commodities and currencies were in one way or another affected by the increasing geopolitical tensions on the Korean peninsula, due to Pyongyang’s sixth nuclear exercise last weekend.
“The excessive use of missiles and nuclear threats shows that he is asking for war,” said Ambassador Nikki Haley during an urgent meeting in the UN Security Council.
“The United States will regard every country that cooperates with North Korea as an assistant to their reckless and dangerous intentions,” he added.
And while there are other countries, such as Russia and China, which believe that dialogue is the only right way in this situation, the risks are becoming too high. And what does that mean? Let’s just say, markets can start to decline for a long time, because investors from around the world are transferring their savings from risky assets to safe haven assets.
And like a bolt from the blue, hi, a bear market. And the question is not whether it will happen, but what to do when it happens. Here are 5 tips to help your portfolio not lose too much.
1 – Emotions to the side
When you see that your stock or currency pair is moving in the opposite direction from you, you think that life is over. However, it is not. On the contrary, if you effectively manage risk (remember the 1% rule?), You can afford to lose something and you will have enough to win other battles and, as a result, the whole war. Pay attention to the market reaction in times of concern.
2 – Buy low, sell high
Whether you like it or not, the economy works that way. There are successful years, and there are also unsuccessful ones. The latter can be viewed as an opportunity to enter long positions with the expectation that assets will recover in this period.
3 – Bears are stronger, do not fight take off
In other words, take a break and stop thinking that you can resist the trend. You can not. You either follow it, or temporarily lie at the bottom.
4 – All attention to what is really important When people are faced with an economic crisis, they tend to reduce consumption and activate some kind of survival protocol. It is at this point that it is important to determine which products and services become key, and which consumers refuse.
5 – Diversification
A properly diversified portfolio is likely to lose something, but it definitely will not fall in the first round. Add a little gold does not hurt, as it does not hurt and without risky assets, such as government bonds. They do well in periods of instability. Pay attention to them.